The Government of Pakistan raised Rs. 575.3 billion through the auction of treasury bills (T-bills) on Wednesday.
The trend of investment interest showed the banking sector to be eager to invest in government papers as the rising deposits owing to the lockdowns have increased the liquidity of this sector.
The rate for this auction was slightly different from the previous auction held on 5 May, adding that the government has accepted nearly half of the amount offered by the investors.
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With the cut-off yields on all papers remaining almost unchanged, the banking sector also perceived this as a sign of a stable interest rate. While the financial segments have been hoping for an increase in interest rates, especially owing to the rising inflation, the central bank seems to remain resolved about maintaining the interest rate, at least for now.
SBP raised PKR 575bn; 6M T.Bills yields up by 5bps
– The cut-off yields of 3M and 12M remained unchanged.
– The cut-off yields of 6M increased by 5bps.
– SBP raised PKR 575bn against target of PKR 500bn.@StateBank_Pak#SBP #TreasuryBills #Auction #AHL #Pakistan #Economy pic.twitter.com/YbXOnnAcF3— Arif Habib Limited (@ArifHabibLtd) May 19, 2021
The only change in the cut-off yield this time around was seen in six-month T-bills that increased by five basis points to 7.60 percent. These bills also fetched the highest investment for the government — nearly Rs. 325.5 billion, with a total bid amount of Rs. 552.5 billion.
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Three-month T-bills had fetched Rs. 180 billion at 7.34 percent, with bids of Rs. 453.9 billion; while 12-month papers had raised Rs. 21.6 billion at a rate of 7.68 percent.
The government also raised Rs. 48.4 billion through non-competitive bids, making the total selling of T-bills Rs. 575.3 billion.
The long-term Pakistan Investment Bonds (PIBs) were also part of the auction and fetched Rs. 20 billion for two-years PIBs, in addition to Rs. 1.064 billion brought by non-competitive bids, making the total as Rs. 21.064 billion.
On the other hand, the latest data of large scale manufacturing (LSM) has shown a growth of 8.99 percent during the first nine months of the current fiscal year (9MFY21). However, higher interest rates can dent this progress.
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